The U.S. is facing a dramatically increasing threat from cyber attacks and a future attack on the country's critical infrastructure could have an effect similar to the Sept. 11 terrorist attacks of 2001, the U.S. Secretary of Defense said Thursday evening.

Speaking at a meeting of the Business Executives for National Security (BENS) in New York, Leon Panetta called the Internet "the battlefield of the future" and spelled out what he believes the Department of Defense's role should be in cyberspace.

The military's role in securing the domestic Internet and working against attacks on commercial institutions has been controversial, although Panetta sought to get the assembled business leaders on his side by warning them of the danger a large-scale attack could have on their companies.

"A cyber attack perpetrated by nation states or violent extremist groups could be as destructive as the terrorist attack on 9/11," he said in the televised speech. "Such a destructive cyber terrorist attack could virtually paralyze the nation." (See video of Panetta warning against future cyber attacks.)

Panetta acknowledged recent distributed denial of service (DDOS) attacks on U.S. financial institutions that disrupted their websites and expressed concern with the speed at which they hit, but said he was even more alarmed by a recent attack by malware dubbed "Shamoon" that hit oil company Saudi Aramco.

"Shamoon included a routine called a 'wiper,' coded to self-execute," Panetta said. "This routine replaced crucial system files with an image of a burning U.S. flag. It also put additional 'garbage' data that overwrote all the real data on the machine. More than 30,000 computers it infected were rendered useless, and had to be replaced. It virtually destroyed 30,000 computers."

"All told, the Shamoon virus was probably the most destructive attack the private sector has seen to date," he said. "Imagine the impact an attack like that would have on your company."

Panetta told his audience the Department of Defense knows of specific instances where attackers have gained access to critical infrastructure systems and said such attacks could do great harm.

"An aggressor nation or extremist group could use these kinds of cyber tools to gain control of critical switches," he said. "They could for example derail passenger trains, or even more dangerous trains loaded with lethal chemicals," he said. "They could contaminate the water supply in major cities, or shut down the power grid across large parts of the country. The most destructive scenarios involve cyber actors launching several attacks on our critical infrastructure at one time in combination with a physical attack on our country."